Gold's Fair Value Is $800 an Ounce

Mark Hulbert advises investors not to expect gold prices to pop back anytime soon. He points out gold's fair-market value may be no more than $800 an ounce.

This transcript has been automatically generated and may not be 100% accurate.

... RI yesterday you all know what happened in gold more gold one write the worst reading in thirty years a terrible number like that ... I he's at the end of that is at the bottom is at the thirteen eighty one is that the bomb knowing when not according to Mark Hulbert joins us from Chapel North Carolina market availability of calm was the headline ... strength and ... the poi ... no qv indicating no question that ... eight hundred dollars eight hundred dollars for Bill Maher ... doubt chastened that this show I can use for my medication and is aware it is a racist column ... idea as any death as the academic study came at a year ago and came to the same conclusion ... course people were a lot more inclined to dismiss it then and now basically somewhat forty some percent of the overvaluation that they thought ... was invented the gold price then as now been worked off two hundred and forty dollars of investible last week ... basically what the authors of this study do is ... go back hundreds of years than they originally created it seriously if the relationship between gold ... and inflation basically looking at that as the basis for the fundamental value ... calculation ... and they say if he translated the CPI terms right now that the ... fundamental value and are basically the pepper tree show called the CPI is about three point two ... two while in right now even at that long thirteen in what you're up of almost double that so that's why basically in a nutshell ... these authors suggesting that we have a lot further to go ... and yet despite his big selloff I mean since last year's story really is accelerating now ... lot of gold bugs are still out there pushing gold and now you mention the College of fine ... felt like there they're ... going to the five stages of grief rate ... well that's a dessert according one of the authors of this a day the day he sees it as the leading given exactly the phenomenon as you mentioned that they're a lot of people in denial about this ... the SEC declined when the things that to ... his argument is based on it isn't the goal is this divorced from underlying fundamental value ... than the price will be affected by things lying to people throwing in the talent ... with the company as underlying earnings instead of the suffering that you can base of fundamental batted well valuation calculation on ... that provide some sort of flow on the price right now it could be anywhere close to eight hundred dollars this ... is the average fair value for gold given current inflation then ... you have a lot of extra room to run to go on the downside and ... especially given that person very large institutional investors who are yet to throw in the towel ... and those that one of the art of pouring out to me that those managers ... I have some fancy footwork to do to try to explain to their clients why they didn't ... anticipate this kind of a move or even if they don't ... succeed in that in the class decided to sell the final together ... than either way this increase in his redemptions common ... and the developer or provide yet more downside the pressure on gold ... the momentum going a hundred even if it ... goes to twelve hundred eleven or so whenever the bottom number is ... this selloff really Khona illustrates ... the ... to the different factors driving the right to fundamental versus the speculative factors in the gold market to look to think that this is great store of value ... Barron's a lot of speculation in this market though isn't there ... really that's the major point of this academic study to try to come out in the prediction business and say this is where gold on the beach or rather the point is ... that gold fluctuate wildly relative to any definition ... of fundamental value you might wanna come up with so a lot of people's response to the study as ... well they government's inflation numbers while they often be if you look at some shows statistics you find that that ... inflation is much higher ... bowed their plan responses even in the shadows to succeed still find exactly what you pointed out in your question which is that ... they're still huge swings in gold's price but with it ... the underlying inflation how every Friday and if you're an investor in goal ... you better be aware of that rather than try to explain every squiggly gold's price in terms of fundamental changes to a higher mark over thank